Sun sales plummet 30.6% in Q4

What? You didn't think we'd notice?

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Bill of Sales

For the past few quarters, Sun has been giving out detailed billings (not booked revenue stats) for its various hardware, software, and services product lines, and in hindsight, these were probably aimed as much at selling the company as they were in selling Wall Street on the idea that Sun had some growth businesses that underpinned any hopes for optimism about the company's stock and its future as an IT supplier. The detailed billings numbers show how the double-whammy of the economic meltdown and the Oracle acquisition hammered down its key products.

Sun's SEC filing shows that billings for the Sparc Enterprise line of servers using Fujitsu's quad-core Sparc64-VII processors saw a stunning 54 per cent decline in the fourth quarter of fiscal 2009, to $435m. This is a much steeper decline than in the prior three quarters and marked the worst - not the best - quarter of the year. Billings for Sun's "Niagara" family of Sparc T series servers were up a smidgen, to $355m, in the quarter, but the "Galaxy" x64 server line saw a 9 per cent decrease in billings, to $178m.

For the year, the Sparc Enterprise platforms declined by 36 per cent, to $2.18bn in billings, while the Niagara platforms grew by 22 per cent, to $1.37bn in billings. The Galaxy x64 line is a big disappointment in fiscal 2009, with billings down 5 per cent to $675m. But to be fair, Sun probably gained market share because other x64 server makers had much steeper revenue declines since the meltdown started a year ago.

Other systems, which presumably means older iron using Sun's own UltraSparc chips and mostly processor and memory upgrades for installed systems, saw a 66 per cent decline in billings for the year, to $434m. Sun's combined systems billings for Q4 came to just over $1bn, down 42 per cent, and for the year came to $4.66bn, down 29 per cent.

In terms of shipments, Sun says that overall server shipments across all architectures declined by 34 per cent (to what I reckon is about 64,000 units) and that x64 server shipments fell by 13 per cent (to what I estimate is about 28,700 units). When you do the math, that means Sparc-based server shipments fell by 45 per cent to around 35,300, and that is presumably with a big bump in Niagara server sales. I think considering the slide in Sparc Enterprise sales, Oracle is going to work out some sort of revamped hardware deal with Fujitsu and stick to the Niagara products for all but the biggest Sparc shops.

And it would not be at all surprising to see Oracle shut down the or spin out the Galaxy x64 server business entirely, or do an X64 server rebadging deal with Hewlett-Packard or Fujitsu to just get rid of that engineering cost.

Sun's software billings in Q4 relating to Java and MySQL were bright spots in the financials, so you can see why Oracle wants to get control of these. But both are still, relatively speaking, small potatoes. Java billings in Q4 came to $108m, up 22 per cent, and MySQL database sales hit 100m, up 10 per cent. Solaris licenses, plus management and virtualization software sales, declined by 29 per cent in the fourth quarter, to 45m. For the fiscal 2009 year, Java billings came to $281m, up 28 per cent, MySQL billings came to $313m, up 51 per cent, and Solaris and add-on license billings hit $159m, down 26 per cent.

Sun's storage businesses are taking it on the chin just as hard as its server lineup. In Q4, disk and storage array billings were down 48 per cent, to $242m. Even with 57 per cent growth in billings for the so-called open storage products (funky servers with lots of disks running Solaris and ZFS), to $51m in the quarter, the storage hole did not even come close to being filled in. Billings for tape products declined by 47 per cent, to $149m, in Q4. Billings for open storage products rose by 59 per cent for the fiscal year, to $145m, but did not grow

The one place where the declines were not as pronounced in Sun's Q4 and fiscal 2009 is support for product support, which includes hardware and Solaris tech support. In Q4, these support contracts represented $886m in billings, down 15 per cent, and hit $3.65bn in billings for the fiscal year, down only 9 per cent. Sun's professional services biz had $257m in billings in Q4, down 27 per cent, and had $1.1bn in billings for the year, down 11 per cent.

Looking ahead to the first quarter of fiscal 2010, you can expect even worse numbers as Sun's 47,000 enterprise customers sit tight and wait to see what Oracle is - and is not - going to do with Sun's product lines.

Sun exited the quarter with $1.87bn in cash and equivalents, $981m in short-term investments, and $695m in long-term debts, or $2.16bn in cashish. By paying down some debts, that makes the net cost of the Oracle acquisition now only $5.2bn. Another crap quarter like this one and Oracle's net cost could drop under $5bn. ®